NAMA prediction of €4.8bn profit cut to €800m loss

NAMA’s promised profit of €4.8 billion was dramatically slashed to a potential loss of €800 million yesterday.

NAMA chairman Frank Daly expressed anger as he unveiled the agency’s revised business plan and said he was “disturbed” institutions had failed to realise the size of their debt exposure.

Only 25% of the €81bn of loans transferred to NAMA will produce any revenue at all, rather than the 40% promised just last October, it emerged after the agency probed the true state of the finances the taxpayer had taken on.

Labour leader Eamon Gilmore demanded to know if banks had lied as he dismissed the NAMA initiative as one of the Government’s “financial fairytales”.

Fine Gael’s Enda Kenny said big developers had been given “sweetheart deals” by ministers while families struggling with their mortgages had to make do with a deeply inadequate rescue plan.

Finance Minister Brian Lenihan said the most likely scenario was for NAMA to make a €1bn profit over the next decade, but warned the agency could lose €800m if loans under-perform by 10%. However, Mr Lenihan said this would be compensated for by bank levies and the worst case scenario for the taxpayer would be to break even.

Mr Daly said the institutions covered by NAMA were “remarkably generous” to their borrowers and NAMA would not repeat that.

“To say the least, we are extremely disappointed and disturbed to find that, only months after being led to believe that 40% of loans were income producing, the real figure is actually 25%.

“We are equally taken aback to learn that the banks were not even using the full range of legal options available to them in order to secure income in respect of troubled loans,” he said.

The revised business plan showed the average discount on loans absorbed by NAMA rocketed from an original estimate of 30% to 50%.

NAMA’s original business plan estimated a profit of €4.8bn based on a rise in assets value of 10%, but the best case scenario now would see such a boost result in a €3.9bn surplus.


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